Toyota Ends Production In Australia: Auto Industry Down Under Is Officially Dead

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February 10, 2014

Earlier today, Toyota announced that it would stop building cars in Australia in 2017. Toyota was the last major automaker with manufacturing facilities in the country, so its pull-out means that the auto industry in Australia is effectively dead.

According to an official press release:

"The decision was not based on any single factor. The market and economic factors contributing to the decision include the unfavourable Australian dollar that makes exports unviable, high costs of manufacturing and low economies of scale for our vehicle production and local supplier base. Together with one of the most open and fragmented automotive markets in the world and increased competitiveness due to current and future Free Trade Agreements, it is not viable to continue building cars in Australia."

Toyota Australia's president and CEO, Max Yasuda, added: "We did everything that we could to transform our business, but the reality is that there are too many factors beyond our control that make it unviable to build cars in Australia.... Although the company has made profits in the past, our manufacturing operations have continued to be loss making despite our best efforts."

The closure of Toyota's production facilities in Australia will directly affect some 2,500 employees involved in manufacturing. An unknown number of white-collar workers will also be impacted, as the automaker shuffles its human resources to accommodate the shift from manufacturing to importing. And of course, an entire network of parts-makers and other suppliers will be affected, too.

This could be another black eye for Prime Minister Tony Abbott, who promised to create a more business-friendly environment in Australia during last year's campaign season. Worse, some economists are predicting that Toyota's announcement could mark a tipping point, sending swaths of the country into recession.

OUR TAKE

Toyota's announcement should come as no surprise to anyone who's been watching the auto industry's troubles in Australia. Early last year, Ford pulled out of the country, and in December, General Motors said that it would follow suit. (The latter was particularly damaging because, as our colleague John Voelcker points out, GM was the only automaker developing cars for the Australian market.)

That left Toyota as Australia's sole car company. While many hoped that the world's largest automaker would be able to tough it out, Toyota issued a carefully worded statement at the time of GM's announcement: "We will now work with our suppliers, key stakeholders and the government to determine our next steps and whether we can continue operating as the sole vehicle manufacturer in Australia." Even the most imperceptive of Pollyannas could hear what was coming.

For additional details and perspective, check out our colleagues at Motor Authority.